Property agent money protection schemes move a step closer
The government is pressing ahead with its plans to make property agents in the private sector join “an approved or designated client money protection (CMP) scheme” if they handle client money.
The move follows a public consultation by the Ministry of Housing, Communities and Local Government at the end of last year.
In its response to the consultation, the government says it’s committed to ensuring all consumers are protected regardless of which agent they or their landlord choose.
The statement says: “Larger agents tend to be members of professional organisations which require CMP scheme membership as part of the membership package.
“Small businesses are therefore less likely to have CMP cover than larger agents. It is therefore important to include small businesses in the mandatory requirement to ensure consumer’ money is protected, regardless of the size of the firm.
“The requirement will only apply to agents that handle client money. Agents that are unable to obtain CMP would still be able to trade but would not be able to handle client money, for example the tenant would pay the rent directly to the landlord.
“The regulations will only apply to letting and property managing agents in the private rented sector. In the leasehold sector, landlords and managing agents are expected to comply with the existing legislation regarding holding service charges and the Codes of Management Practice.”
The government says it intends to introduce mandatory CMP before the proposed ban on tenant fees, which it announced last year. It says: “This is to ensure that consumers are protected, and that client money is not lost in the instance of any agent going out of business, as a result of the ban.”
Two new measures will be put before parliament as soon as time allows. The first will set out of the process and conditions for approval of scheme providers; the second will impose a requirement on property agents to join an approved/designated scheme and make provision for the enforcement of the duty.
The government says it will release further information in due course.
We shall keep clients informed of developments.
Please contact Sonia Dad if you would like more information about the issues raised in this article or any aspect of commercial property law.